SFIO to finalize Reebok report after statutory audit

Adidas, which acquired Reebok in August 2005, has accused two former Reebok India executives siphoning off funds. Photo: Ramesh Pathania/Mint

Updated: Tue, Oct 16 2012. 12 30 AM IST

New Delhi: India’s Serious Fraud Investigation Office (SFIO) will submit its report to the corporate affairs ministry on the alleged Rs870 crore Reebok India fraud case after an audit of the company’s accounts is completed, a government official said.

The statutory audit, likely to be completed by the second week of November, is being carried out by New Delhi-based Narsimhan and Co., the official said, requesting anonymity.

“The statutory audit is something we carry out every year and is part of regular procedure,” a company official said, without elaborating. He too declined to be named.

Consulting firm Ernst and Young (E&Y) has already submitted a forensics report on Reebok India’s accounts to the company and the police after the fraud allegation, said both the officials.

The SFIO may eventually access the forensic report, the government official said, adding that the E&Y report has confirmed the claims made by Adidas in its police complaint on 22 May.

Mint could not independently verify this.

Adidas, which acquired Reebok in August 2005, has accused two former executives of Reebok India of a Rs 870 crore fraud and siphoning off funds from the company by creating ghost distributors across the country and generating forged bills over the past five years.

Bhupinder Singh, assistant commissioner of Gurgaon police investigating the case, declined to share any details of the E&Y report as it was part of an ongoing investigation.

The company official too refused to share details of the E&Y report.

Police has arrested 12 former company executives, including former Reebok India chief Shubhinder Singh Prem and former chief operating officer Vishnu Bhagat. Seven of these arrests were made last week.

Praveen Agarwal, who is representing Prem and Bhagat, said the next hearing for the case is slated for Tuesday.

Reebok India hired E&Y to help restructure its operations following allegations of financial fraud, Mint first reported on 16 July.